Starbucks vs. Charbucks One entrepreneur's vow: He won't get creamed by big coffee.
(FORTUNE Small Business) – It's tempting to take Jim Clark's side in his six-year battle against coffee colossus Starbucks--at least until you hear him talk about it. "The significance of this case," intones the 59-year-old entrepreneur, "is that in this country a big company can force someone out of business and destroy his life."
That someone, though, isn't Clark. The business he founded with his wife in 1995, the Black Bear Micro Roastery, has been "on the verge of bankruptcy" for four years. By his own admission that has nothing to do with Starbucks and the case it brought against him to drop his sound-alike Charbucks brand. "We went into this business pathetically undercapitalized," he says. Furthermore, he concedes that in 1997--when, at a customer's request, he reluctantly issued a brand of dark-roast coffee--he knew he could be stirring up Starbucks. First he called it Charbucks Blend and later Mister Charbucks. It was a joking reference, he says, to what he considers an over-roasted brand. "We figured they would never come after us," says Clark, whose firm is based in Center Tuftonboro, N.H., and rings up $200,000 a year in sales.
Clark's calculation seemed reasonable: A $4 billion company probably has better things to brew than going after a tiny purveyor of coffee beans sold via mail order and in local markets. But in August 1997 the Clarks heard from Starbucks headquarters in Seattle. "The girl was so rude that it pissed me off," says Jim's wife, Annie, 48, who answered the phone. "The way they said 'You will stop' rather than 'Will you stop?' I don't think they have a right to do that."
Technically the dispute is about whether Clark infringed on the Starbucks trademark by choosing a name that would confuse consumers. But somewhere Clark seems to have gotten caught up in the romantic notion of slaying a storefront savage--and one that's treated him in what he regards as an offhand manner. In 1998, Clark nixed a settlement offer whereby Starbucks would have given him $2,500 for legal fees in exchange for dropping the Charbucks name. At the time he had spent around $1,300. But, yes, such numbers are beside the point. "I didn't like the wording or the way we were portrayed," says Clark. "I'm adamant that we did nothing wrong." Eventually Starbucks filed suit, doing so, as the company said in a statement, "after a prolonged but ultimately unsuccessful attempt to enlist Black Bear's cooperation and to resolve this matter without litigation."
That's when Clark began staying awake at night. But it wasn't Starbucks weighing on his mind. "The stress we've had is the result of our attorneys," he says. "We've had screaming matches. They thought we ought to settle, and they refused to defend us aggressively." Clark proudly recounts the loudest battles: on an elevator after a pretrial hearing; in a parking lot after he was deposed. Michael K. Terry, one of the two lawyers who has worked on Clark's case, responds, "Jim is a very stubborn fellow." Clark has also collected data about three other small companies Starbucks has sued. If Clark's behavior sounds excessive, keep in mind that he is so against "taking orders" that he refuses to stand for the Pledge of Allegiance at school board meetings.
Last March, in a potentially precedent-setting trademark case involving Victoria's Secret, the Supreme Court ruled that the lingerie giant had to show it had suffered actual damages when a small business used a similar name. "I haven't hurt Starbucks," Clark insists. He looks forward to hurting its feelings, though, by printing up T-shirts touting his victory and walking into their stores. Then again, he made JUST BREW IT T-shirts but never got any reaction from Nike. "We figured that if they came after us, we would get a little publicity and drop it," he says. Could the coffee entrepreneur be milking this flap for the same purpose?